OPEC warns of weak recovery for oil market

The OPEC oil producers' cartel warned of lingering weakness in the world economy and held its emergency crude output quotas unchanged at its meeting in Angola on Tuesday.

Delegates at the meeting also said that growing output from Iraq's recovering oilfields, which observers say will become a major concern for its fellow producers, was unlikely to have an impact for several years.

Tuesday's meeting capped a year of recovery for oil prices, which have more than doubled since quotas were cut a year ago to stabilise the market during the economic crisis that crippled demand for petroleum products.

Saudi Oil Minister Ali al-Naimi, representing the cartel's most influential member, said crude price levels, which have been hovering around 75 dollars, were "perfect."

Jose Maria Botelho de Vasconcelos, President of the OPEC Conference and Angolan Minister of Petroleum

But the powerful grouping of Middle Eastern, African and Latin American oil countries in a statement expressed "great concern" for the world economic outlook, which threatens to weaken demand for their key exports.

"Although asset market prices have rebounded and economic growth has resumed in some parts of the world, it is not yet clear how strong or durable the recovery might be," they said in a joint communique.

"With the world still faced by shrinking industrial production, low private consumption and high unemployment, the conference once again decided to maintain current oil production levels unchanged for the time being."

Observers had said ministers at the meeting would have one eye on Iraq's recovering oil industry and its ambitious plans to ramp up its production to levels that could rival Saudi Arabia, the world's biggest oil producer.

But Iraqi Oil Minister Hussein al-Shahristani and others played down the prospect of a surge from Iraq's oilfields, saying the question of quotas for Iraq was unlikely to be tackled in the immediate future.

The cartel's Secretary General Abdullah El-Badri told reporters after the meeting: "I don't expect any production increase (by Iraq) before five or six years," but added that one day, "I am sure we will accommodate Iraq."

Iraq is currently exempt from the cartel's system of quotas, but recently signed contracts with several foreign companies to start pumping crude oil, aiming to expand the industry as it recovers from war.

A consortium led by top Chinese oil company CNPC initialled another deal with Iraq on Tuesday, to develop the Halfaya oil field in southern Iraq, oil ministry spokesman Assem Jihad said.

OPEC members called for higher compliance with the quotas. The group's current president, Angolan Oil Minister Jose Botelho de Vasconcelos, said even non-OPEC countries should play their part to "balance the market."

Tuesday's OPEC meeting was the first to be hosted by Angola. The country joined OPEC in 2007 and has overtaken Nigeria as Africa's biggest crude producer, according to the International Energy Agency, but it still suffers from three decades of civil war that ended seven years ago.

The 12-member group is next due to meet on March 17, when the presidency will have been taken over by Ecuador.

Oil prices fell slightly on Tuesday after the OPEC members' decision. New York's main futures contract, light sweet crude for delivery in February, fell 32 cents to 73.40 dollars a barrel.

AFP

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